One of the biggest challenges for business owners is seeing when changes are needed and then implementing those changes. You build your business from the ground up, invest blood, sweat, and tears, and enjoy a measure of success. But what happens when no amount of blood and tears are enough to raise stagnant revenue? Recently Inc. Magazine and I took a trip to Brooklyn to visit 718 Cyclery, where owner Joe Nocella was struggling with exactly that problem. Joe describes his problem as a leveling off.
“We had some great growth over the years, and then for a number of reasons, we started to see things kind of level off.”
Pinpointing the Reasons for Stagnant Revenue
Joe’s business caters to a very specific crowd: serious, avid, urban bicyclers who are willing to pay top dollar for top quality bikes. He wants to sell only quality bikes in his shop, but there’s just not a big enough market to do that. At least not enough to lift his stagnant revenue, which has hovered around $1 Million for the past few years. I looked around at his products and his financial statement. I noticed a few things right away:
- His bikes were beautiful, but they were very expensive.
- His bike sales only accounted for about 50% of his profits.
- The shop had a contact list of about 6,000 ideal customers that he wasn’t doing anything with.
It seemed to me that 718 Cyclery had lost a little bit of its mojo, and I could see right away how that had happened in Joe’s reaction to one of my suggestions to carry a selection of inexpensive starter bikes to lure new customers in and expand both his customer base AND his revenues.
“Norm’s idea of a $200 situation? That’s not going to happen here.”
Implementing Change – It’s Just Like Riding a Bike (Keep Pedaling!)
He was very resistant to the idea, since in his mind it would impact the integrity of his business and risk giving his customers a bad experience. This is understandable, but as I detailed in the video, there are ways to go about it that preserve his integrity AND work to create the next generation of bike enthusiasts who will come back to his shop when they’re ready to get a better quality bike. I also suggested doing more with his customer list, if not by selling it, then by featuring products and maybe securing discounts for his customers.
It’s an easy trap to fall into. You think that what worked to carry your business through its startup years is what’s going to continue to work. In my experience you couldn’t be farther from the truth. Challenges and opportunities come at you faster than life. You have to be willing to accept when a plan is no longer working and think creatively to keep your company’s mojo going and rescue it from plateaued, stagnant revenue. Change is hard. But it’s necessary. As I told Joe:
“You’re struggling with making changes. And if you want to get unstuck to make a decent living for you and your employees, you’ve got to change the way you’re doing things.”
My impression of Joe is that he’s a good, caring person who wants to build his business honestly, help his workers, and give his customers a good experience. I’m positive that he’s got what it takes to change what he’s doing and guide his company to greater success!
Read Norm Brodsky’s article in its original form at Inc. Magazine’s website.